It’s no secret local governments are looking to increase revenues and trim budgets. In what is likely a grab at more cash, the DC Government has made it more challenging to get and keep your Homestead Property Tax Deduction. This is the reduced tax rate that owner occupants receive and that the settlement company likely filed for you when you purchased your home. The Homestead credit saves homeowners $578 a year on their property taxes.
Some clients have received letters from the city asking for documentation to prove that the properties are still their primary residence in order to keep the Homestead exemption. If you get one, respond with the requested documentation or you risk losing your status.
And for new purchases, the settlement company will no longer be able to file this for you. In order to get the credit on new purchases, you will have to file yourself after you have changed your driver’s license, your voter registration and received a utility bill at the new address—all of which you will need to provide copies of with your application.
NOTE: If you are receiving the homestead deduction on a property that is not your primary residence and/or if you have a vacant property that is not registered as vacant with the city, you could face fines and penalties. DC is actively pursuing these fines as a revenue source, so it makes sense to correct the record and avoid the fines by taking advantage of the DC Tax Amnesty program available through September 30th.
